Tuesday, October 27, 2009

US Has Plan For the Too-Big-To-Fail Darlings

According to the New York Times, the United States are about to give themselves more options to deal with the gigantic risks that such firms create for the economy at large. These include kicking management out, taking control of the firm and playing around with their capital structure so as to minimise the risk to the system as a whole (the so-called systemic risk).

A fair response, I guess, to the uproar of throwing good taxpayers' money after bad behaviour.

4 comments:

GS666 said...

Bad behaviour was allowed by the Government. They should stop acting like they are our saviours now.

The line between private and public sector in America has been blurred to a point of non existence. One should not forget that is it commonplace that agents private firms write legislations that are supposed to regulate them.

Politicans have also for their own political objectives had a shot at the mortgage market and reduce lending standards. One should not forget that freddie and fannie were government-sponsored enterprises!

Sanjay Jagatsingh said...

What about the Stimulus package in Mauritius? It appears to me that no line has been drawn between bad management and very bad management.

sanjivP said...

"Socialise the private losses and capitalise the private gains", goes the saying.
That is, the private sectors are shrewd enough to plead their plight with government so that they do not have to dig into their deep pockets to meet their financial obligations. Their weapon - dangling the spectre of firing employees in difficult times. Even our finance minister seems to fall into the trap, no matter how bright he is!

Sanjay Jagatsingh said...

Did our Finance Minister fall in the trap or is the one who has trapped a majority of our citizens with his massive incompetence?